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Thai Beverage Public Company Limited’s Stock Has Climbed 159% In 5 Years: Is It Still A Cheap Stock?

Thai Beverage Public Company Limited (SGX: Y92) is a Thailand based-company that distills spirits and brews beer, and also produces a wide variety of non-alcoholic beverages. In addition, it runs restaurants and distributes food products (such as sandwiches and frozen foods).

The alcohol-related businesses are by far the most important for Thai Beverage. They collectively make up 88.2% of the company’s total revenue for the six months ended 31 March 2017.

Over the past five years, Thai Beverage has been a great performer in the stock market with its stock price up by 159%. The company’s strong return raises the question: Is Thai Beverage still a cheap stock?

There’s no easy answer since there are many ways to look at a company’s valuation. But, we can still get some insight by comparing Thai Beverage’s current valuations with the market’s.

The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

At Thai Beverage’s current stock price of S$0.88, it has a PB ratio of 4.4, which is nearly four times higher than the SPDR STI ETF’s PB ratio of 1.2.

Meanwhile, the alcoholic beverages company has a PE ratio of 22, which also represents a significant premium to the SPDR STI ETF’s earnings multiple of 13.

Lastly, for the dividend yield, Thai Beverage has a trailing yield of 3.7%. Unlike the PB and PE ratios, Thai Beverage actually has a more attractive yield than the market’s 2.9%.

To sum things up, Thai Beverage can be said to be more expensive than the market given its significantly higher PB and PE ratios. But it’s worth noting that a deeper look at Thai Beverage’s business is needed before any firm investing conclusion can be reached. Valuations are only one piece of the puzzle – and like I mentioned earlier, there are many other approaches to value a company beyond what I’ve shared above.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.